Indigo Books & Music Inc. has entered into a definitive agreement with Trilogy Investments L.P. and Trilogy Retail Holdings Inc. whereby TILP will acquire all of the issues and outstanding common shares of the company that it does not own for $2.50 per share in cash.
Trilogy, together with its affiliates and joint actors, currently owns an aggregate of 16,774,665 common shares of Indigo, representing approximately 60.6% of the issued and outstanding common shares as of the date hereof. TILP and TRHI are controlled by Mr. Gerald W. Schwartz, a member of the board of directors of the company. The agreement is subject to approval by the holders of Minority Shares and other customary closing conditions.
Today’s announcement is the culmination of negotiations that took place following the public announcement on February 1, 2024 of Trilogy’s non-binding proposal to acquire the Minority Shares. The purchase price of $2.50 per share reflects a 69% premium to Indigo’s closing price of $1.48 per share on the Toronto Stock Exchange on February 1, 2024, being the last trading day prior to the public announcement of the Initial Proposal, a 56% premium to the 20 business day volume weighted average price for Indigo’s common shares on the TSX, and an 11% increase in the consideration as compared to the Initial Proposal of $2.25 per share. The cash premium transaction will provide Minority Shareholders with immediate and certain value that is expected to be higher than that realizable in the foreseeable future.
“Following careful consideration of a wide variety of factors and negotiations with Trilogy that resulted in a material increase to the price first offered to minority shareholders of Indigo, the Special Committee has determined that the transaction is in the best interests of Indigo and its minority shareholders,” says Markus Dohle, Chair of the Board and Chair of the Special Committee.
“Since its inception,”Dohle continues, “Indigo has established itself as a cherished Canadian brand with an important leadership role in the Canadian publishing and bookselling industries. We believe that this transaction will provide minority shareholders with a substantial premium for their shares following some challenging years for the business, while also ensuring a strong future for Indigo with full ownership by a team that has demonstrated a deep commitment to Indigo’s mission.”
The Special Committee was established by the Board to consider the Initial Proposal, as well as other alternatives available to the company and, if it deemed advisable, negotiate with Trilogy. Following a comprehensive evaluation of the Initial Proposal and negotiations between the Special Committee and Trilogy on price and other terms of the transaction, the Special Committee unanimously recommended that the Board approve the transaction. The Board (excluding conflicted directors), having received the unanimous recommendation of the Special Committee, unanimously determined that the transaction is in the best interests of the company and fair to the Minority Shareholders and recommends that Minority Shareholders vote in favour of the transaction at the special meeting of shareholders to be held to approve the Transaction.
The company expects to hold the special meeting of shareholders to consider and to vote on the Transaction in May 2024. If approved at the meeting, the transaction is expected to close in June 2024, subject to court approval and other customary closing conditions. Following closing of the transaction, the common shares of the Company are expected to be delisted from the TSX.
Indigo is currently a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). The book and lifestyle retailer operates retail stores in all 10 provinces and one territory in Canada, and also has retail operations in the U.S. through a wholly-owned subsidiary operating a retail store in Short Hills, New Jersey. Retail operations are seamlessly integrated with the Company’s digital channels, including the www.indigo.ca website and the mobile applications, which are extensions of the physical stores and offer customers an expanded assortment of book titles, along with an assortment of general merchandise.
The company also supports a separate registered charity, called the Indigo Love of Reading Foundation, which is committed to addressing educational inequality, and more specifically, the literacy crisis in Canada. The Foundation provides resources including new books and learning materials, training, and year-round curation support to help ensure teachers, education staff, school administrators, and other key stakeholders have the tools they need to promote literacy in their communities. With the support of the Company, its customers, employees, and suppliers, the Foundation has committed over $35 million to more than 1,000,000 students across Canada since 2004.